What does an ‘Automatic Extended Reporting Period’ (ERP) actually do? For special cases this provision works well but, it normally does not provide any coverage. Firms that think that this provision provides continued coverage for 60 days past the policy expiration date are in for a rude surprise. Nothing could be further from the truth. This mistake will bite you.
The attorney malpractice insurance policy ‘Automatic’ 60-Day ERP provision does not extend coverage and does not provide a ‘grace’ period for renewing coverage. If your policy has this provision the only thing this ERP provision does is extend the reporting period in cases where no other coverage is purchased. If other coverage has been purchased, then this provision is null and void.
Even with this ERP in force, if you have not renewed your coverage by the policy expiration date, there is no ongoing coverage for current acts past the policy expiration date. This ERP does not allow extra time to find other coverage and maintain your prior acts coverage. If coverage lapses there will be a gap in coverage. You likely will lose your past acts coverage. If you truly need an policy extension talk with your agent and get the insurer to issue an endorsement extending the policy expiration date. Normally the insurer will charge a prorated additional premium for this endorsement.
From the Axis Pro Lawyers Professional Liability Insurance Policy Extended Reporting Periods Section of the following is typical language for this policy provision:
“1. Automatic Extended Reporting Period. If the named insured or we do not renew this policy, or we cancel this policy for reasons other than for non-payment of premium, we will provide the named insured with an automatic, non-cancelable sixty (60) day extended reporting period. This automatic extended reporting period terminates sixty (60) day after the end of the policy period. The limits of liability applicable to claims made during the automatic extended reporting period shall be part of and not in addition to the limits of liability set forth on the Declarations.
No automatic extended reporting period shall be available if the named insured obtains another lawyers professional liability insurance policy that applies to such claim within sixty (60) days immediately following the end of the policy period.”
Don’t mistake this provision with giving you extra time to renew coverage. If you do have a lapse in coverage most insurers will not provide prior acts when writing a new policy.
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